Explain the benefits to a company from listing its security on an international stock exchange.

A company may choose to list its shares in a stock exchange of a country other than that in which the company is based. Firms may adopt international listing to obtain advantages that include lower cost of capital, expanded global shareholder base, greater liquidity in the trading of shares, prestige and publicity. Decision makers also need to be satisfied that the benefits exceed possible costs, such as listing costs, exposure to legal liabilities, taxes and various trading frictions, and reconciliation of financial statements with varying national standards. Because of the benefits of being cross-border listed, more and more companies are getting themselves listed on stock exchange markets based outside of their home countries. Here are more benefits of such a move. Increased Market Liquidity: International listing enables companies to trade its shares in numerous time zones and multiple currencies. This increases the issuing company's liquidity and gives it more ability to raise capital. Market Segmentation: Market segmentation is the practice of dividing a large market into clear segments with similar needs. International listing enables firms to divide foreign investor markets into segments which are easy to access. Companies seek to list internationally because they anticipate gaining from a lesser cost of capital. This arises because their stocks become more available to foreign investors. Their access to these stocks may otherwise be restricted due to international investment barrier. Capital Needs and Growth Opportunities: Companies in emerging markets need to use international listing to raise capital to continue to grow beyond their home market. Wider Shareholder Base: International listing provides access to a larger pool of potential investors (both retail and institutional). Wider shareholder base are less risky. Better Investor Protection: Companies need to comply with the provisions of all the regulatory aspects of the listing of those countries, where sought to be listed. Investors will therefore find themselves more protected and comfortable to invest in these companies. Secure Clearing: A stock exchange provides a reliable and secure clearing mechanism. Listing on a foreign stock exchange is possible only after creating robust and advance clearing system. Other Benefits: Higher visibility/brand awareness, increased opportunities for mergers and acquisitions, entering markets with better investment protection reduces costs and creates bonding (a signal of corporate governance).